California Short of Milk

There's news that some California processors are actually looking for milk to fill their orders. That includes one of the state's major players, Hilmar Cheese. Supplies are tight, and sources there don't expect milk production to surge.

"It seems as though we zoomed from too much milk to too little milk in a very short period of time,” says Eric Erba, vice president of government relations for California Dairies Inc. (CDI). The state's largest dairy marketing cooperative, CDI handles 42% of the GoldenState's milk supply.

Until recently, the nation's No. 1 dairy producing state was awash in milk. Some analysts estimated California's excess milk production was more than half a million gallons a day more than the state's processing plants could handle. Production soared to 41 billion pounds in 2008.

But several months of reduced production have changed all that. Through August of this year, California is down about 930 million pounds of milk, or 3.3%, from year-earlier levels. If that trend continues through the end of 2009, the state will be down more than 1 billion pounds and will be lucky to produce 40 billion pounds this year.

"The comfortable period for milk handling lasted only about four months,” Erba says. "It's hard to believe that the comfort zone for milk production is so narrow, but that is what we have experienced this year. California has been off in milk production every month in 2009, and now that is starting to have an impact on dairy producers' ability to supply milk to buyers, whether through a cooperative or through a direct shipment arrangement. CDI is no different.”

CDI is not looking for milk, Erba adds. "We have been contacted by a number of processors and cooperatives who ARE looking for milk, but we are not. With our processing plants, we have the ability to move milk around to balance the milk supply with demand for milk. Other processing companies or cooperatives may not have that same ability.”

The reasons why California is having trouble now are not too much of a mystery and were foreseeable to some extent, adds Erba. California has had losses of herds to the CWT herd buyouts, which has affected total milk production. Low milk prices have not encouraged producers to expand or even consider expanding. The lack of incremental production expansion is a little unusual by itself, he says.

In addition, some producers adjusted their feeding practices earlier in the year. By itself, switching to a lower-cost, and likely a lower-quality, feed impacts the amount of energy taken in by the cow and the amount of milk she can produce, says Erba.

"Furthermore, the switch to a lower-quality feed will affect the amount of conditioning carried by the cows,” he says. "Consequently, when we had our three spells of sustained hot weather this summer starting at the end of June, the cows did not respond back after the hot weather had passed as much as they usually do. In fact, following this latest hot spell in September, the cows don't seem to responding at all to the cooler weather. Again, it's unusual but not unexplainable.”

Prices are improving, "and that may be helpful to sustain producers, but there is an awful lot of lost ground to be made up,” Erba says. "I don't expect to see a surge in milk production any time soon.”

Catherine Merlo is Western editor for Dairy Today. You can reach her at cmerlo@farmjournal.com.